In B2B, it’s particularly important to maximise customer lifetimes so you can grow competitiveness. E-commerce provides many ways to acquire and retain customers and to create opportunities for long-term relationships. By offering a good customer experience, working with loyalty incentives and adding aftermarket services, e-commerce can improve CLV – Customer Lifetime Value.
The B2B sector often has longer sales processes than traditional commerce as a result of the technical, quality and commercial complexities of each sale. This makes it even more important that, once you’ve gained a customer, you retain them over time.
Focusing on Customer Lifetime Value can bring huge rewards. If you can reduce your customer churn by a few percent, it can have a huge impact on the bottom line.
Customer Lifetime Value explained
Customer Lifetime Value is the sum of all costs to acquire a new customer (in other words, the costs of marketing and sales) and the costs to retain a customer (loyalty discounts etc.) compared to the total revenue each customer gives over time.
In B2B marketing, the cost of acquiring new customers can be high. Sales cycles are long and complex, involving quotes, price negotiations and quality controls. This makes it as important – if not more important – to maintain existing customers rather than to have to continually acquire new ones.
The major benefits of increased CLV:
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Reduced costs for marketing and sales
The cost of marketing and sales of B2B products can be high. Focusing on CLV, allows you to reduce overheads associated with customer acquisition.
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Improve repeat business
A concentration on retention encourages repeat purchases, developing more secure revenue streams and enhancing your reputation as a good supplier.
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Stay one step ahead of your competitors
By valuing existing customers and increasing their commitment, they become more loyal to you. This can give you a significant advantage over your competitors. If you succeed in reducing your customer loss to only 2.5% annually, you’ll achieve a 50% increase in sales over five years compared to a company that has an annual 5% customer attrition.
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Increased sales through positive customer reviews
Satisfied, long-term customers are more likely to become advocates for your business, giving positive reviews and spreading the word to those in their networks, opening the door to new sales opportunities.
There are many ways to maximize CLV, but one of the most reliable is to offer the customer a seamless buying experience which is intuitive, quick, allows for self-service and is supported across multiple channels.
Customer-centric e-commerce solutions and customer portals can help you:
Use customer data to refine content and improve experience
To gain insight into how to improve the customer experience, you’ll need to understand how customers interact with you via different channels, how they consume content and carry out transactions. Collect data along the way and use these insights to produce content which helps the customer make the right buying decisions.
Customise your communication with the customer
Help your customer to feel seen and understood by using data to enable more personalised communications that talk to them and their needs directly.
Exploit all channels
With an e-commerce platform, you’ll be able to exploit all channels in the buying process, offering the customer the opportunity to choose the channels they are comfortable with and increasing the likelihood that you will retain them for longer.
Offer your customers more self-service
More and more buyers are accustomed to modern web interfaces and prefer to use fast, self-service options. Giving them solutions which meet their expectations and needs will enhance their perceptions of user experience.
Get your customers into a loyalty programme
A customer-focused portal can be used to deliver loyalty programmes, offering benefits such as preferential treatment, discounts and better service, adding value to the relationship and reducing the risk of attrition.
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How to focus on Customer Lifetime Value:
- Review the information, campaigns, services and purchase options currently offered to customers. Try to group them by popularity and internal time spent on maintenance.
- Identify all the customer data collected by different systems and consolidate, clean and enhance it in a central place so you can get a unified image of the customer. Analyse and understand which customers are profitable over time. From here you can build a more detailed picture and communicate with customers individually.
- Collect feedback from your customers and customer-focused teams about areas for improvement.
- Prioritise and evaluate the different options for facilitating a better customer experience.
- Identify whether you have the right solution for your e-commerce/customer portal so you can expand and develop more self-service options. In this way you improve the customer experience and increase loyalty and lifetime value.
- Measure, analyse, test… Repeat.
Remember, it’s a marathon, not a sprint. Start small and build knowledge. As you grow, you should develop a team that focuses on increasing CLV over time.
If you have any questions about how you can increase your own Customer Lifetime Value, we’d love to hear from you!
Learn more about customer portals in our webinar series
